Question

The following transactions occurred during 2014. Assume that depreciation of 10% per year is charged on all machinery and 5% per year on buildings, on a straight-line basis, with no estimated salvage value. Depreciation is charged for a full year on all fixed assets acquired during the year, and no depreciation is charged on fixed assets disposed of during the year. Jan. 30 A building that cost $132,000 in 1997 is torn down to make room for a new building. The wrecking contractor was paid $5,100 and was permitted to keep all materials salvaged. Mar. 10 Machinery that was purchased in 2007 for $16,000 is sold for $2,900 cash, f.o.b. purchaser's plant. Freight of $300 is paid on the sale of this machinery. Mar. 20 A gear breaks on a machine that cost $9,000 in 2009. The gear is replaced at a cost of $2,000. The replacement does not extend the useful life of the machine but does make the machine more efficient May 18 A special base installed for a machine in 2008 when the machine was purchased has to be replaced at a cost of $5,500 because of defective workmanship on the original base. The cost of the machinery was $14,200 in 2008. The cost of the base was $3,500, and this amount was charged to the Machinery account in 2008. June 23 One of the buildings is repainted at a cost of $6,900. It had not been painted since it was constructed in 2010. Instructions Round to the nearest dollar.) Prepare general journal entries for the transactions.

Answer 1

Answer:

Here are your general entries:)

Profit and loss account $19,800

Accumulated depreciation $112,200

To Building                          $132,000

( Building torn down recorded)

Building torn down expense $5,100

To cash                                   $5,100

(paid to contractor)

Cash $2,100

Accumulated depreciation $11,200

Profit and loss account $1,900

  To machinery           $16,000

(disposal of machine recorded)

Freight expense $300

To cash   $300

(freight paid recorded)

Repairs of machinery $2,000

To cash $2,000

(New gear brake added to machinery)

Profit and loss account $1,400

Accumulated depreciation $2,100

To old base    $3,500

(old base expensed out)

Machinery account $5,500

To cash   $5,500

(New base constructed)

Depreciation of base $550

To accumulated depreciation $550

Paint of building expense $6,900

To cash      $6,900

Explanation:

Addition of gear brake not added to cost of machinery because it does not extend the useful life of machine.